THE ROLE OF CROSS-COUNTRY TRADE PARTNERSHIPS IN STRENGTHENING GLOBAL MARKET COMPETITIVENESS

Abstract

This study examines the role of cross-country trade partnerships in strengthening global market competitiveness through an empirical and theoretical analysis covering the period 2016–2021. Using a quantitative research design that integrates static fixed-effects and dynamic autoregressive distributed lag (ARDL) error correction models, the study evaluates how the depth of trade partnerships, institutional quality, foreign direct investment (FDI) inflows, and trade openness collectively influence the Global Competitiveness Index (GCI). The results demonstrate that trade partnership depth has a significant and positive impact on competitiveness (β = 0.312, p < 0.01), indicating that economies with deeper, rule-based trade frameworks achieve greater productivity, innovation, and efficiency gains. Institutional quality is found to amplify this relationship by reinforcing regulatory stability, transparency, and enforcement capacity, thereby facilitating the effective transmission of trade-related benefits. The dynamic estimations reveal that while short-run effects are positive but modest, long-run relationships remain stable and substantial, confirming the delayed yet enduring impact of policy-driven trade integration. Furthermore, FDI inflows and export diversification are identified as key mediating variables that strengthen competitiveness by promoting technological diffusion and economic resilience. Regional analysis indicates that the European Union (EU) and ASEAN exhibit the strongest trade–competitiveness linkages due to institutional maturity and integrated governance, whereas the African Continental Free Trade Area (AfCFTA) shows emerging but moderate effects constrained by infrastructural and regulatory limitations. The study concludes that deep, inclusive, and institutionally anchored trade partnerships serve as the cornerstone of sustainable global competitiveness. It recommends that policymakers pursue comprehensive trade frameworks complemented by institutional reforms, innovation policies, and investment facilitation strategies to maximize the economic benefits of global integration. This research contributes to existing literature by providing empirical validation for the synergistic role of trade depth, institutional quality, and investment in shaping competitiveness, offering a replicable analytical model for future policy and academic applications.